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The opening slogan captures the end re- sult of resizing efforts in many companies. Unfortunately, such ef- forts seldom do very much to keep a sinking ship afloat. In this chapter, we take a more optimistic look at resizing and consider how organizations can ease the pain of changing their size and ul- timately improve through the process. Our thesis is that more adaptable organizations handle resizing better than their less adapt- able counterparts. Elements of Size Size has several meanings in organizations. With respect to the workforce, size often refers to the absolute number of people on staff (rather than assets, sales, market value, and the like, which 347 348 RESIZING THE ORGANIZATION also can measure a firm’s size). Thus, most talk about sizing refers to how that total shrinks or grows through hiring, voluntary de- partures, and layoffs. Other elements of size are of equal or even more importance. One area of interest, for example, concerns the relative size of units, layers, and other groupings in a company. There are many studies on ratios between line employees and staff, between su- pervisors and direct reports, and between managerial, exempt, and nonexempt groups, as well as the implications for different types of firms (Porter & Lawler, 1968). Human resource specialists find it useful to compute relative staffing, salary, and promotion rates for various occupational, racial, and gender segments in their firms. Different configurations give an organization a different shape and character. There also are more qualitative dimensions of size to consider. For example, a firm may be “top heavy” with se- nior executives or “bloated” with middle managers, and its work- force may be “fat and happy” versus “lean and mean.” In this chapter, we consider two separate dimensions of size. The first element, organization size, refers to the absolute number of people employed by an organization. The second, organization shape, reflects the distribution and grouping of employees within a company. This dimension also includes people connected to a firm as contractual or contingent labor and even as a supplier or strategic partner. Certainly, size and often shape change as an or- ganization resizes itself. Organizational Adaptability There are basic requirements for adaptability having to do with an organization’s structure, culture, and people. In the case of struc- ture, these include optimal levels of differentiation (to observe boundary conditions) and integration (to formulate and imple- ment a response). Adaptability also is enhanced by having roles and rules that allow for appropriate levels of communication and enable work units to self-design a response to change situations. These structural features are involved whenever an organization changes its size and shape. An adaptable culture, in turn, includes values and norms that support a flexible structure and processes that promote both con- tinuity and change among people and in relation to the business environment. Culture can be a bane or boon to resizing and is surely affected by the results. Finally, an adaptable organization has optimal diversity among its people overall and has a significant pro- portion who can cope with uncertainty and change. We now take a closer look at adaptability in structure, culture, and people in terms of resizing and reshaping an organization. Organizational Structure An organization’s structure defines the distribution of units and positions within it and how these different parts are related ( James & Jones, 1976). Structure dictates who works with whom, for whom, doing what, and so forth. Although observers vary on what they consider to be the most germane dimensions of structure, most include role definitions, the division of labor and authority, and boundary relationships. An adaptable structure enables a company to observe, report, and quickly respond to changes in its environment. Different struc- tural arrangements, in turn, argue for units of a different size and shape. For instance, structural differentiation recognizes diversity in an organization’s environment and allows units to get closer to distinct opportunities and threats. With respect to size and shape, this typically translates into smaller business and work units, oper- ating under decentralized authority, and with the capacity to re- spond to situations with great flexibility. Integration, by comparison, favors larger scale, often features centralization, and standardizes more activities. It reduces the costs of gathering and assembling in- formation and of launching and coordinating a response. Finding the optimal mix of differentiation and integration is a constant challenge for companies. To move quickly and efficiently between the two, many companies rely on temporary structures, have employees work on multiple tasks, and develop a capacity for their workforce to band together and disband without a lot of fuss. In practice, this translates into the 3Rs of resizing and reshaping an organization: restructuring, retraining, and retention. Changing the number of employees in a firm, whether up or down as the need dictates, is no guarantor of success. More im- portant is the management and grouping of the human capital of ORGANIZATIONAL ADAPTABILITY 349 350 RESIZING THE ORGANIZATION an enterprise, that is, the accumulated value of employees’ knowl- edge, experience, skills, and abilities that contributes to the at- tainment of an organization’s goals (Knowledge Workers, 2001). Many authors have documented the point that a firm’s strate- gies, and even its processes, products, and services, can be copied quickly by its competitors (Lawler, 1994). By comparison, the know-how and experience of employees cannot be so readily imi- tated and thus provide a more sustainable source of competitive advantage. Resizing affects not only head count but also the value of human capital in an organization. Reductions in force typically subtract from human capital, even when poor performers are removed. The problem is that most companies lose not only individual knowledge but also collective human capital in downsizing. We contend that an adaptable organization maintains more of its human capital with a reduction in force than a less adaptable firm does. One place to see this is in the results of downsizing in the United States during the 1990s. The evidence is clear that many firms undertook across-the-board cutbacks and emphasized getting higher-paid people off the payroll (De Meuse, Bergman, & Vanderheiden, 1997; Marks, 1993). As a result, business units and staff departments suffered comparable reductions regardless of their strategic significance and value added. Furthermore, there was scant accounting of employee performance in layoff decisions; often, a disproportionate number of mature workers departed with early-retirement packages, robbing firms of organizational memory and depriving younger workers of seasoned mentors. In many instances, the most marketable and valued surviving em- ployees then voluntarily jumped ship, and yet another round of layoffs followed. By comparison, firms that downsized effectively did so with strategic intent and underwent some form of restructuring. These firms reported fewer problems with their downsizing and far more favorable human and financial results (Marks, 1993). In turn, they complemented their resizing efforts by retraining many more of their employees for new jobs and emphasized retaining their top talent (Mirvis, 1997). These 3Rs—restructuring, retraining, and retention—all have a bearing on the structure of an adaptable organization. . look at resizing and consider how organizations can ease the pain of changing their size and ul- timately improve through the process. Our thesis is that more adaptable organizations handle resizing. separate dimensions of size. The first element, organization size, refers to the absolute number of people employed by an organization. The second, organization shape, reflects the distribution and grouping. success. More im- portant is the management and grouping of the human capital of ORGANIZATIONAL ADAPTABILITY 349 350 RESIZING THE ORGANIZATION an enterprise, that is, the accumulated value of employees’